Financial Modelling via Excel & OneDrive
Clean Hydrogen Production & Integration into an Ammonia Complex
The trend towards replacing fossil fuels with renewables does seem to be gathering momentum, but does it always make economic sense?
Environmentally it may seem like the right thing to do even perhaps for reasons besides 'climate change' with that being dependant on how one stores the energy.
Life on earth has evolved around the electric potential of H2 across a membrane - perhaps we should emulate this?
I stumbled upon a project that might provide some insight into the financial implications of choosing this alternative path.
This particular project is interesting in that it has some flexibility in the way the plant can be operated in order to leverage on price variations
of Natural Gas (NG), Hydrogen (H2) and Carbon Credits (CC).
The project involves using a wind farm to power an electrolyser to produce hydrogen from water. The hydrogen can be sold into the transport market or used to replace the NG based hydrogen feedstock to an ammonia plant. The power from the wind farm can also be used to replace the NG based power to the fertilizer complex. These two decision control points may allow one to exploit price movements of NG, H2 and CC to maximise the plants profitability. Every time NG gets replaced by free wind effectively one has a saving on NG cost and the CO2 produced during both power generation and H2 production. Some limitations do exist as to when the H2 feedstock to the ammonia plant can be replaced due to the stoichiometry of the reactions. Presented below are models for return on investment (ROI) and a discounted cash flow rate of return analyses (DCFRoR). The convention used is that green cells can be altered to do your own modelling. The projects flowsheet, prices, exchange rates , nameplate capacities and stoichiometries are shown after the modelling section.
Return on Investment (ROI)
The ROI sensitivity is only shown for the more profitable option of selling all the H2 produced.
Discounted Cash Flow Rate of Return (DCF RoR)
Note: The embedded graph is not dynamic
Nameplate capacities, prices, costs and other fixed inputs
This sheet is not linked to the financial modelling sheets. Altering H2 and Urea production (green cells) is FYI only.
Molecular Masses & Stoichiometry
- The project is most sensitive to NG cost changes. The Henry Hub NG price is used, but no estimate of transport costs to site is added.
- Routing H2 to NH3 production as opposed to direct sale of H2 is probably the least attractive option of all the control decisions
- Routing all power to replace NG based power is more profitable than direct sale of H2 for mid & high NG costs. Opposite occurs at low NG costs.
- Carbon credits within the estimated range have a far lesser impact on returns than NG & H2 prices
Technologies used - discussion
- One of the advantages of using Excel/OneDrive in a presentation like this, is that one doesn't need to worry about users' changes being saved. Using Google Drive/Sheets, all user inputs get saved, thus necessitating some means to restore 'default' values.
- The above sheets have been embedded separately and thus lose any update refresh between sheets. Each sheet can still reference and use separately shown sheets (or unshown) but input on one sheet will not update a 2nd sheet. To achieve this the Workbook must be embedded.